AUD/USD – Short term trend UP, Long term trend UP
The AUD/USD broke through resistance of 1.0600 and has traded as high as 1.0792. RBA leaves rates unchanged and downgrades the Australian growth forecast. The global growth outlook is a concern for the RBA with European sovereign debt issues weighing on the European banking system.
The US economic weakness continues with lower than expected factory orders overnight.
The market awaits this Friday’s US job numbers for further US economic direction.
Moody’s warns China that local government debt must be cleaned up or the outlook for Chinese banks may turn negative.
The Australian economy continues to perform well with the trade balance for May rising to a trade surplus of $2.33billion from $1.62billion in April. Exports rose 3.2% and imports rose 0.4%.
The AUD/USD is holding above 1.0600 and we expect further upside with a test of 1.0800. Currently trading at 1.0730, support is at 1.0650 and resistance at 1.0800. We expect another test of 1.1000 in the near term and in the absence of any negative news from China or debt contagion in Europe.
EUR/AUD – Short term trend DOWN, Long term trend DOWN
The EUR/AUD has drifted lower with support at 1.3450 under threat. Moody’s downgrading of Portugal to junk status with a negative outlook has led the EUR lower against the AUD. Moody’s cited concerns that Portugal will not be able to achieve the targets agreed under its bailout package with the IMF and EU. S&P has stated they consider the current proposal by French banks to rollover Greek debt to constitute a default. International Banks are reported to be meeting with the European authorities tonight to determine the terms of private investors’ participation in any restructuring of Greek debt.
We expect the EUR/AUD to continue lower with a test of 1.3250 whilst 1.3650 holds. Further support is found at 1.3000.
GBP/AUD –Short term trend DOWN, Long-term trend DOWN
The GBP/AUD has bounced of 35 years lows at 1.4884 trading as high as 1.5080 overnight after better than expected UK services PMI data. Bank of England is expected to leave interest rates on hold this Thursday despite high UK inflation. Currently trading at 1.4980, we expect the GBP/AUD to continue within a range of 1.4800 and 1.5150.
AUD/JPY – Short term trend UP, Long term trend UP
The AUD/JPY has traded up to ¥87.20and is currently trading at ¥86.70. The Japanese economy may be picking up as factory output increases and business sentiment recovers. Japanese companies are restoring supply chains faster than expected. The global growth outlook however remains a concern for the Bank of Japan. We expect the AUD/JPY to hold support now at ¥85.50 and trade higher to ¥88.30.
AUD/NZD – Short term trend DOWN, Long term trend DOWN
The AUD/NZD has traded between 1.2870 and 1.3050 as both currencies regain lost ground from risk aversion selling. The NZ economy has shown a sharp rebound in business confidence and recovery in the labour market. Currently trading at 1.2940, we expect the AUD/NZD to trade between 1.2700 and 1.3050.
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